How much money should I save for retirement?

Written By Eileen St. Pierre

A client of mine recently asked me how much money he should have saved for retirement at his age. That’s really an essay question but I know he wanted a multiple choice answer. I’m always hesitant to rely on “rules of thumb” because they can oversimplify the issue. But on the flip side, investing is such a foreign subject to many that I believe in this case rules of thumb can be a good place to start.

Fidelity issues retirement savings guidelines using your age as a guide:

  • Have 1x your annual salary saved by age 30

  • Have 3x your annual salary saved by age 40

  • Have 6x your annual salary saved by age 50

  • Have 8x your annual salary saved by age 60

  • Have 10x your annual salary saved by age 67

This analysis makes several assumptions:

  • You save 15% of your annual income for retirement.

  • You invest more than 50% of your retirement portfolio in stocks on average over your lifetime.

  • You retire at age 67.

  • You have the same lifestyle as you did before you retired.

If any of these assumptions do not hold, the amount you need for retirement will change. Just remember, life’s greatest questions are in the form of an essay not multiple choice problems.

Eileen St. Pierre
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